The Science of Flipping - Episode 171: New Investor Gets First Deal with $0 Marketing Budget

Episode Date: October 30, 2020

Marketing is one of the most important functions of your business, but you don't always have to spend money in order to lock down deals. One of my students, Sterling, locked down his first deal without a marketing budget and we're going to dive deep into how he made that happen.

Welcome to the Science of Flipping Podcast. I'm your host, Justin Colby. What's up, everybody? Welcome back to the Science of Flipping Podcast. I am your host, and I have another incredible student who is absolutely crushing it and the special part of this story is he has a zero dollar marketing budget and has gotten this deal done mr sterling phillips what's up dude what's going on justin hey glad to be here appreciate you for having me absolutely man well now. Well, now you're worldwide, man. This is going to iTunes and Spotify and all the syndicates that take the podcast. So you're no longer just up in Oklahoma. Oh, man, that's great.

That's great. I like the exposure and I appreciate it very much. You're very welcome, dude. Well, hey, you deserve it. You know, obviously we've worked together and you've studied behind what I've taught for quite a while now and it's paying off. Right. And so I wanted to have you on here and, and just talk to, talk to everybody about what you've done, how you were able to get the deal that we're going to talk about. It's your first deal in a brand new market, which is really, really big for a lot of people.

They either might be moving to a new market and they're trying to figure out what they should be doing. Should they go get a job? Should they be jumping full speed into real estate investing? So I think there's a lot of relatability there in what your example is going to show. And then there's also people who are thinking about virtually wholesaling, right? And maybe not wholesaling or investing in their market, but doing it on other markets and starting something new and how that all looks. And so why don't we take a second and just kind of give me your 30 seconds of your history in the investing space. And then obviously we can kind of fast forward to the deal that we're going to talk about is it is your first. And again, correct me since you moved to Oklahoma, this is your first deal, correct? Correct. That is correct. So as you all know, my name is Sterling. Um, I started my

investing journey in 2016. Um, my very best friend, I got to give him a shout out, Daryl James. Um, I was coming, getting out of the military and he was like, Hey, what you going to do after the military and stuff? So I was like, I don't know. I was chilling, having a good time. So he was like, Hey, let's start investing. So in 2016, um, I was living in Georgia, uh, and we started investing there. So I got my first deal, my very first deal in Georgia. It was, it was crazy. I didn't know anything about investing. We had the money to do it. So we partnered, we actually partnered with another investor out there and did our first deal. And we only made like a thousand between a thousand to five thousand dollars but we learned very

little but we did a deal and I was yeah so now fast forward here now in Oklahoma throughout the years I did learn more about real estate and more specifically wholesaling I was like man wholesaling is my niche. I want to do that instead. I mean, I don't need a lot of money and I can do it. Oh yeah. That's the route I want to go. That's it, right? Correct. Correct. So fast forward to here to 2019, 2020, I came back to Oklahoma, Lawton, Oklahoma to be specific. And I was just looking at the market and I was thinking like, man, are people doing deals here? And I started joining the local real estate investing groups. And I was seeing a little bit of activity, but not a lot. And especially when it comes to

wholesaling, I wasn't seeing really any activity. Like I would look on Craigslist, I would look on the Facebook groups, like there was people doing it, but not at a high volume. So, or if there was, it was unseen. So, so in the beginning of 2020, I started taking it serious, even more serious when I joined your five day, your five day challenge. And that's when I think that was back in July yeah yeah so back in July is when I took it completely serious and from the first day you showed us how to do deals without any money it's basically I don't know how far you want me to go into details on it but uh it yeah we can I want to stop for a second because I think it's such an incredible story. Are you originally from Oklahoma? No, no. I'm originally from Ohio, but I grew up here in Lawton, Oklahoma.

And I think it's just so great that you went into a market where you didn't know much of the real estate. Obviously, apparently, you do know the area. But you basically jumped in. And one thing I caught right when you were talking about that is you joined a bunch of the RIA groups or the investing associations the meetup groups and you know one of the big keys here is you got this deal done with a zero dollar marketing budget right you had no marketing budget to go spend and you got your deal done and I swear by that and obviously you are an ex-student of mine I guess guess you will. But, you know, one of the things that is so important when people are getting into this business, you can start and launch your business and you can grow your business without having to spend a ton of money, right? And you yourself are starting and launching your business.

And through my trainings, you were able to find this deal, etc. But, you know, understanding the power of those associations and those meetup groups really helps you understand what your market was like. So you were doing like a lot of data intel, like what's going on? Who are the big players? You know, who's moving a lot of properties? Who's wholesaling versus flipping? Are any of those guys good for money? Like you were doing that as you were getting started. And I think it's something people undervalue these days. And especially as we're recording this podcast, right? The whole Corona things going on, but they undervalue the networking component of our business. And after 13 years, I'll tell you, you hit it right on the head, dude, you did exactly what's right. Cause I'm doing anywhere from 10 to 20 deals simply through my network every month, just through my network. Meaning I also have a

$0 marketing spend for those deals. And you see now the power of that. Right. Right. Absolutely. So, um, within our five day challenge, you know, uh, one of, one of the people that was in the five day challenge reached out to me. It was like, Hey, you want to team up? Um, I'll take care of the marketing. I in the five-day challenge reached out to me. It was like, hey, you want to team up? I'll take care of the marketing. I'll pay for all the marketing. You just do all the work. Of course, man, I'm a grinder.

I'm a grinder. So I'm going to get out there and make it happen. So we ended up partnering up on this deal. And we still partner to this day. His name is David. Pretty sure if you was to go back in the group, you'll know who David is. So he was paying for all the marketing and I was reaching out to the homeowners. I was going to go view the properties and everything. So then finally, we was able to come across a seller who wanted to sell a duplex. So and this duplex is not in the greatest

neighborhood, but this neighborhood is getting better. You know, a neighborhood can only get better as long as we invest in it. So this here, the seller wanted to get rid of their duplex because they're an out-of-state seller and it was vacant it's been vacant for like over seven years and he was still paying a mortgage on it so all he wanted was hey all i want is enough money to pay off my mortgage and you can have it so come to find out and i'm just gonna be completely transparent he he owed 7 000 so i was like okay 7 000 this is a duplex this is a deal so what i did was with prop stream utilizing prop stream i looked at the data and it told me okay if i get it underneath uh 7 000 i can at least sell it for 10 000. So with that data, I locked it up for 7,000. And then I found a buyer and I sold it.

I found a buyer on Facebook marketplace. Like you showed us how to do utilizing your training. I went on Facebook marketplace. I built out the buyer's template, how you showed us, and I put it on Facebook marketplace. And I promise you, I got over 400 and something hits on it. There was a lot of tire kickers, of course, but then there was some buyers who were looking at it like, ah, it's too much work, but for a price like that, and depending on your, your actual strategy, you know, it can, it could be an income producing property in the long run. So.

Absolutely. Well, there's so much there to unpack, man, because you did this brilliantly, right? Like literally we spent five days together. You were part of my five day challenge and you effectively like did all of it. Correct. Right. And so one thing I want to bring to light is how you partnered with someone where you're the sweat equity and they're the capital equity. That is completely okay. There's a lot of people that may question whether they should do that model. I, over the years, have had marketing partners in the sense of they will stroke a check for the marketing, but they rely on me, my team, and my operation to do all of the actual sweat equity work in the business, right? For me, essentially, it was they wanted to cherry pick rentals. And if it wasn't a good rental, then we

would just wholesale it off. But my business was to go get the deals, and they would pay for the marketing. And you have some similar example of that, right, where you have kind of a marketing or capital partner partner and you're the equity partner. That is, you know, across all platforms, not just real estate investing or wholesaling. There's a lot of businesses that have those relationships. So great job for you to find that individual. And another great job because you found it within your network. Again, this goes back to your network. Almost all things that you need or I need or other people need are usually within your network, right? And so you found him in the coaching program. You guys hit it off. You had conversations. Another reason why people really

should be a part of groups and coaching programs or masterminds, et cetera. And now you have a capital partner and you can be that person. So that's brilliant. Great job there. The other thing, you know, it's so funny when people are saying, I don't have any buyers. I don't have any buyers. Go look on Facebook Marketplace and go contract a deal and put it on there. You're going to very quickly be able to build your buyers list along with any of the groups, right? I don't know if you put it in any just typical groups, like a wholesaling group, you start to post in there. People are going to say, here's my email, send it to me. You know, they'll DM you, Hey, I want to see that deal. Here's my email. You'll very

quickly be able to do that. And for those of you listening or watching this podcast, go to tsofdata.com for a seven week free trial of PropStream, tsofdata.com for a seven week free trial of PropStream. TSOFdata.com for that seven week trial. That is what Sterling uses. That's what I use. Something I use in my business. Obviously it worked out for you, dude. But dude, that is fantastic.

And all said and done with no money into the deal, you're going to walk away with a couple thousand dollars and get the deal done. I think it closes this week. Correct. This Friday. Absolutely. And that is awesome. And with that, you know, um, and with, and with the other ways that you showed us how to get deals, you know, I'm working on that way as well. It's like, Hey, you see in these Facebook groups are in these groups in general, who has a deal, you find out who has a deal, and then you find out who's looking for a deal and you connect the two and you receive a small

fee as well. So, and that's also without any money involved as well. So it's just connecting the two people. And that's what I'm actually doing in the Oklahoma city market right now, but is finding a, who has a deal, who's posting deals and who's looking for them, see if I can connect them myself. And if not, I'm always here to help. So even if I don't receive a profit from it, at least I feel good about helping another investor acquire another property and a wholesaler a releasing a property to them. No doubt. And so you are in Lawton, Oklahoma, which is a very small city. You and I have actually looked at several deals together through coaching and whatnot, but there's a big military base, right? Correct. Absolutely. So people always ask me,

like, how do I know I'm picking the right market if they're going to go virtually into a different market? Or what about, you know, should I leave my own backyard and go into a different city? And I'll always use ideas and examples regarding what is in their backyard, because I'm always an advocate, as I told you, stick to your backyard first, right? So now you got this first deal done. Now, if you're going to sprawl your wings and open your wings and get over to Oklahoma City, at least you know there's action going on in your backyard before you go to quote unquote a bigger city. Because a lot of people will say, Justin, my city's too small. I don't have enough going on here. And Lawton's not a big city,

but you do have a military base and that will always create a need for housing. Correct. Absolutely. And that's where a lot of the revenue here comes from is from the military. And in Oklahoma, we're the, I think, fourth, either fourth or the sixth largest city in Oklahoma. So it's not bad. We still got over 100,000 plus people here but and you know in most cases like oklahoma city tulsa they're three four five six hundred thousand yeah so but um here we're able to move deals and do deals and just solely based off the military being here it's a great rental market so and then like i told you before and like i'll tell the rest of the world you, you able to buy a house here for five, 10,000, fix it up and rent it for six, 700, you know, way more than the 1% or the 2% rule that people use. Absolutely. And if you know, hit me up and I'll make sure if anyone's out there looking for good rentals, make sure to reach out to Sterling and Sterling, obviously now would be a good time for

them to know either your email address, your social media, Instagram, Facebook, so they can get a hold of you. How can people get a hold of you, dude? So I'm really a private person. Okay. Hey, they can go through me first. They can go through me first. Absolutely. All right.

Fair enough. Reach out to me if you're interested in rentals in Lawton, Oklahoma. Again, it looks like you're picking up homes anywhere from 10,000 to 20,000 and it's renting for 600, $700 a month. Those are great markets. I personally, you didn't know this. I'm talking to you about, you know, my own rental portfolio there, but any, you know, as you jump into Oklahoma city, what are your thoughts here? Are you going to fully stop everything that you're doing in Lawton or are you going to continue Lawton and slowly migrate over there or kind of have, I don't want to say two divisions, but I'm, you know, I can't find the word, but like almost two markets that you're going to be working simultaneously. I'm going to be, I'm going to continue in Lawton because it's a great area, of course.

And yeah, the next area I'm expanding to is Oklahoma City. And then, hey, the rest of the world. So this is where one piece of advice I think you and everyone else needs to learn. I think you're making a couple thousand dollars on this deal, right? Keep it. You don't need to go like, okay, a lot of people say, okay, now I need to go start a new marketing strategy. Or I need to go pay for a website to come up or I need to do direct mail or I need to do whatever they may be thinking they need to do.

When you don't have a consistent flow of deal flow coming, do not go out and start spending that money. Keep it, right? Put it back in your bank and keep doing what got you there. I think a lot of people might get their first deal or second deal or third deal and then they lose track of what got you there. I think a lot of people might get their first deal or second deal or third deal, and then they lose track of what got them there. And they're, you know, spending all their money in new systems and strategies because they're listening to everyone's YouTube station, everyone's podcast station. So they're investing in all this stuff and now they have no money to pay their own bills. So make sure you're keeping it because the reality is,

dude, you could be doing 10 of these a month just in Lawton with extreme focus, right? And so keep your money. Don't go invest it into direct mail or PPC marketing or any of that, right? It's not enough money yet. Now, if you go make 20 or 30 grand, okay, now we wanna take a percentage of that

and increase your marketing budget and then actually go, whether again, cold calling, text, whatever it may be, then you take a piece of to be paying $1,500, $1,800 for that skip trace list in Lawton. That would have eaten up your entire profit on this deal, which isn't terribly bad, but you don't need it yet. Go do two or three or four or five more of those without having to spend a big marketing budget and, you know, keep ringing that bell so to speak absolutely right on anything else you want to leave the people uh hey i appreciate y'all watching the watching the podcast and yeah like i say um there's some there's some smaller markets that you can do volume in you just got to find those deals and it may take time like this deal literally took me two months just because I was able to contract

the property fast, but moving the property is where it took a long time because a lot of buyers had evaluated. And then with the increase of the coronavirus and stuff like that going on, it took longer than expected. So it took me two months to close. Yep. Yeah. And that is a reality right now. And you're dealing with like, that was a duplex and the condition of the home wasn't great. So I even looked considered buying it. Right. And so you're dealing with a couple hurdles there, but at the end of the day, you got it sold. Right. And so great job, bro. I'm so proud of you. You've definitely taken what I've taught you, put it on steroids, you're running hard. All of that is doable, right? And so, you know, again, if anyone is out there

and they're trying to figure out how to get in the space, be the next Sterling, just go to thescienceofflipping.com, thescienceofflipping.com and just fill out a form that you and I can have a chat. If I can help you and we're a good fit, great. And if not, that's all good too. But just go to thescienceofflipping.com, fill out the form, and I'm happy to have a call with you. See if I can help and make you the new Sterling out of Oklahoma, man. I appreciate your time, dude. Thank you very much. Congratulations. Keep going. I'm always here for you as always. But I appreciate you coming on, dude. I appreciate you for having me you